Approaching Business Models from an Economic Perspective (SpringerBriefs in Business)

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Under normal circumstance these actors have little incentive to work together for an extended period of time. Yet, when a disaster strikes, they are suddenly faced with the pressure to combine all their capacity and capability to relieve human suffering. Section 1 describes inter-organizational interactions governance forms and coordination mechanisms ; in particular, it examines the move from inter-agency coordination to cross-sector cooperation. Section 2 delineates humanitarian-business partnerships, and it stresses the benefits they produce for both humanitarian organizations and companies; it shows how they are vital to a successful operation, and it also focuses on the importance of cross- learning opportunities.

Section 3 underlines the role and main features that logistics companies should possess to become partners for the humanitarian sector. The chapter provides the reader with a description of inter-organizational inter- actions in emergency relief operations, and reveals the importance for cross- learning between the private and the humanitarian sector.

Market interactions have the characteristic of being adaptive to environmental changes through enabling autonomous decision-making by each organization involved in the transaction. Hierarchical interactions are supply relationships between superordinate and subordinate entities within the same economic organization a single organization or group of organizations. Hierarchical interactions have the characteristic of being centralized, with formal rules and patterns for decision-making in a stable environment.

Cooperation embraces various possible forms of inter-organizational interac- tions that are located in a continuum between the two extremes of market and hierarchy. Cooperation is rooted in common intentions and leads via negotiations to agreements in which the partners remain legally and—with certain restric- tions—economically independent, e.

Markets, hierarchy, and cooperation use specific coordination mechanisms to manage interactions. Coordination mechanisms provide tools for effectively managing these types of interactions: Thus, coordination consists of a set of methods used to manage inter-organi- zational interactions Fig. Coordination does not automatically produce good performance; it has to be properly managed to generate positive results. Reduced to its simplest form, the impact chain looks like this: It follows, therefore, that improvements in humanitarian coordination translate into better logistic performance.

This has been particularly evident since the South Asia tsunami, following which inter-organizational coordination or the lack thereof became one of the main issues of humanitarian logistic practice and research. The attention on coordination relies on many initiatives. The importance of coordination is well known within the agencies and programs of the United Nations UN system. The UN system has agencies and programs with particular mandates, e.

In particular, output indicators are those that indicate the direct products of a specific program of activities, i. Outcomes indicators are those that reflect the benefit received by recipients as a consequence of aid activities, i. Impact indicators are those that describe positive or negative, direct or indirect effects and lead to primary or secondary long-term intended or unintended effects, i.

However, no crisis ever involves solely food, children, or refugees. Agencies and programs have to work together to achieve sustainable and comprehensive results, and coordination is needed among them to avoid inefficiencies, including mainly the wasteful duplication of efforts. In view of the importance of logistics coordination, the United Nations Joint Logistics Center was activated under the custodianship of the WFP with the mandate to coordinate and optimize the logistics capabilities of humanitarian organizations in large-scale emergencies. The recommendations contained in the HRR reflect the experience of the UN humanitarian reform program following many relief operations: Details of the different clusters and their respective lead organization s appear in Table 3.

It is the responsibility of each cluster leader to facilitate and improve inter-agency coordination through the pooling of resources. It is also part of the assigned task of each cluster leader to make appropriate recommendations to enlarge cooperative efforts by involving entities outside the UN system, such as NGOs and companies. Focusing on logistics, the WFP—the leader of the logistics cluster—has to improve the surge capacity, speed, and effectiveness of the humanitarian response by ensuring better logistics preparedness Box 3.

The World Food Programme and its engagement as an inter-agency logistics service provider. Although its focus remains on delivering food and saving lives, the WFP provides services that include the transport and storage of general cargo and non-food items, the transportation of humanitarian aid workers and donors, coordination of the logistics response on behalf of the humanitarian community, and the provision of training for humanitarian logisticians from other international organizations. Initially, the WFP was mainly a develop- ment agency that had minimal involvement in emergency operations, but it has gradually become the primary focus of operations; more than a third of the total official development assistance has been directed to emergencies.

This process includes the following: Logistics is at the core of WFP operations. As the global leader of the LC, the WFP is responsible for ensuring that a well-coordinated, efficient, and effective logistic response is initiated for each emergency, not just for WFP food, but also as part of the larger humanitarian response. The WFP-led LC provides effective coordination of the logistics sector and, if needed, augments the logistic infrastructure and provides common logistic services for the humanitarian community as a whole.

Since the first cluster activation in the Pakistan earthquake response of , the WFP-led LC has supported the logistic response for over 30 emergency operations worldwide. Humanitarian organizations use the network of depots to keep strategic stocks of emergency relief goods, such as medical kits, shelter items, IT equipment, and prefabricated office and storage units so that they are better able to respond to the immediate needs at the onset of an emergency. In addition to storage services, the UNHRD network is a one-stop shop for procurement, transport, customs import-and- export services, and technical field assistance for participating organizations.

The ALITE mobilizes staff, partners, assets, and emergency-response equipment required to augment the logistic capacity of both the WFP and the humanitarian community reaction at the onset of a crisis. The WFP works to enhance the surge capacity, predictability, and effectiveness of the global humanitarian response by improving logistic preparedness and inter-agency coordination.

The WFP designs and conducts specialized training in technical logistics, management skills, and develop- ing a service mindset. Emergency simulation training is organized to equip logisticians with the skills to respond to emergencies. The WFP also develops innovative tools, including tracking systems, online toolkits, and manuals.

Trainings and tools are made available to WFP staff as well as to the wider humanitarian community. In particular, the WFP, with its engagement as an inter-agency logistics service provider, is clearly aware that it cannot undertake all the logistic efforts on its own: The WFP cooperates with private- sector partners to increase the effectiveness of emergency operations without adding to the administrative burden. Buffett Foundation Quinn In recent years, governments have also moved in the same direction as the WFP: For instance, the mayor of Kenner, Louisiana, a suburb of New Orleans, publicly noted that Wal-Mart distributed aid to Hurricane Katrina victims more quickly than the U.

Federal Emergency Management Agency Spring Therefore, the focus of interest on inter-organi- zational interactions has shifted from inter-agency coordination to cooperation between nonprofit and private sectors, especially with respect to building rela- tionships between humanitarian and business organizations. The next section describes humanitarian and business partnerships with the aim of improving logistics and supply chain management in relief operations. Prior to this, cooperation between the two sectors seemed unfeasible Stapleton et al.

Conversely, from the humanitarian sector point of view, profit-driven companies were perceived to be the cause of, rather than solution to, problems affecting the developing world, e. The humanitarian sector dealt with companies when necessary and on a purely commercial basis, such as to buy goods or services. In some cases, the humanitarian viewpoint was tempered by the philanthropic efforts of individual companies as donors.

The tsunami represented a turning point in the engagement of the corporate sector in humanitarian relief. Subsequently, companies and aid organizations alike have been examining ways in which they can cooperate more fruitfully. With that disaster, the urge to donate non-monetary offers—of in-kind goods, communications and IT equipment, and logistics supports—was enormous, and it has revealed some important criticalities Thomas and Fritz In this respect, the following points deserve mention: A number of companies were, however, able to provide significant support to humanitarian organizations in the relief effort.

The difference here was that these companies had established relationships with aid agencies well before the tsunami struck. Coca-Cola, for example, has for years maintained a relationship with the Red Cross and other aid agencies in many countries. Working with local subsidiaries, Coca-Cola converted its soft-drink production lines such that they could bottle huge quantities of drinking water, and the company used its own distribution network to deliver the water to relief sites.

Humanitarian organizations, which at one time regarded cash as the only useful form of corporate giving, have shown greater interest in the resources, expertise, processes, and technologies owned by companies. In fact, humanitarians have started to think about their growth not just in terms of more goods, services, and funds, but also in terms of stimulating and improving professional and managerial skills by acquiring them from the business sector Blansjaar and Van Der Merwe Companies may also be interested in re-establishing business continuity after a disaster and in playing an active role in relief operations delivered in regions where they have facilities, employees, suppliers, and customers; in this way, they will be able to sustain their own business in the wake of a disaster.

Moreover, companies may be interested in reaching specific geographic areas after a disaster and in building relationships with governments to identify new markets and open new business opportunities in countries where they are not yet present. Companies may be especially interested in boosting their efforts to find innovative solutions in the event of a disaster, such as with products, services, and processes: Moreover, since humanitarian organizations have decades of experience in solving problems on the front lines of disasters, they could offer companies the opportunity to experience how to manage logistics in extreme circumstances.

DHL Speedball—innovative transport solution for the final mile. Following the South Asian earthquake of , DHL employees recognized that conventional transport containers, such as boxes, are often insufficiently robust. Instead, they used durable, waterproof DHL courier bags to deliver goods as part of relief efforts to remote and inaccessible areas. Speedballs have been tried and tested in numerous relief efforts.

In , delivery using DHL Speedballs was extremely effective for the flooding in Pakistan, after the earthquake in Chile, and after the tropical storm in Guatemala. In Pakistan alone, more than 2, DHL Speedballs were packed and prepared for delivery to the flood-affected areas. The filled bags were then loaded onto helicopters of the Pakistan Air Force, US Air Force, and British Royal Air Force; the bags were flown to victims in remote towns and villages, where they were either dropped or, where landing sites were available, handed over to people on the ground.

The DHL Speedball com- bines handling ease with effectiveness, making it an excellent way to deliver aid to those who need it most. For both humanitarians and companies, working together seems to provide benefits and it can also make the difference in complex relief efforts between suc- cessful and unsuccessful operations.

When two or more entities from the business and humanitarian sectors and with complementary resources agree to cooperate by virtue of their mutual interests, they establish a partnership. Humanitarian-business partnerships are called diagonal partnerships, and they differ from vertical and horizontal partnerships in terms of the value chain perspective.

Vertical partnerships take place between different actors along the same value chain within one industry, such as suppliers, manufacturers, distributors, and customers. The substantial convergence of interests and the complementarity of positions along the chain explain the natural propensity that organizations have toward these forms of collaboration. Horizontal partnerships involve actors that operate at the same level in the industry to which they belong. They are partic- ularly delicate forms of collaboration because they occur between competitors.

By contrast, diagonal partnerships occur between actors at different levels on the value chain without direct competition or direct service relationship and from different sectors or industries. Thanks to the possibility to transfer knowledge experienced in a given sector to other areas of application, this type of partnership is often used to boost the search for innovative solutions.

In cooperating within their partnership agreement, the two sectors can learn from each other, and they can build up a process of transferring the best practices see Box 3. Learning is the process of developing knowledge that is embedded in the transmission of the best practices. An example of the transmission of the best practices: TNT and its knowledge of warehousing and distribution. The transmission of the best practices is not about acquiring new knowledge, but about taking advantage of existing knowledge. Such was the case with TNT, when they were asked to help redesign humanitarian warehousing in Brindisi, Italy.

TNT transferred their vast knowledge of commercial ware- housing, while at the same time gaining a better appreciation of the complexity of humanitarian operations. The transfer of the best practices was more difficult because of the complexity of the situation. The challenge of transferring knowledge was an opportunity for TNT to refine their understanding of a new setting with different conditions.

Tomasini and Van Wassenhove b p. Specifically, humanitarian organizations are many years behind the private sector in understanding the importance of logistics and in adopting efficient supply chain management. Recent years have seen considerable improvement in the humani- tarian sector with respect to the general science of logistics and supply chain management. In fact, just as the science of logistics and supply chain management have become critical for private-sector logisticians, the same applies to humanitarians.

Through cooperation in both supply chain management and in logistics oper- ations, the organizations involved can show the following improvements: Humanitarian organizations are specialized in being agile and adaptable since they usually face extreme and complex logistic conditions owing to the great uncertainty that characterizes disasters. Thus, thanks to cooperation with human- itarians, companies may practice new logistic solutions in difficult circumstances, thereby improving the agility and adaptability levels of their supply chains.

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For example, companies could learn from humanitarian organizations how to reach the most remote parts of the world by imaginatively employing unconventional delivery systems, such as air-drops, bicycles, elephants, yaks, donkeys, and camels www. Conversely, companies have particular competency in structuring interactions among different players along the supply chain, in developing appropriate infor- mation and communication technology platforms and processes, in implementing greater visibility e.

Through cooperation with companies, humanitarians could learn how better to structure disaster supply chains and improve their short-term delivery capabilities via a major level of alignment. The forefront capabilities in relief operations are the core competencies of humanitarian organizations by virtue of the primary role they play. These orga- nizations are in fact licensed to operate in disaster areas thanks to their guiding principles of humanity, impartiality, and neutrality3; these principles create a space in which the organizations can operate free of political and economic agendas.

This difficulty depends on the high turnover of the personnel knowledge owners involved in field operations between disasters; it also depends on the absence of a structured knowledge system that allows experiences to be shared among people and for them to be transmitted from one occurrence to another. Acquiring major back-office management capabilities from companies could support humanitarians in developing a knowledge-management system; such a system could capitalize on lessons learned from past disasters, avoid repeating such errors, and readopt successful solutions.

This could help bridge the knowl- edge gap from one disaster to another. The form of partnership that is best able to enhance cross-sector learning opportunities is the integrative partnership.

In addition to integrative partnerships, companies and humanitarian may cooperate in other ways. Humanity implies that human suffering should be relieved wherever it is found; neutrality implies that relief should be provided without bias or affiliation to a party in the conflict; impartiality implies that assistance should be provided without discrimination and with the priority given to those in most urgent need Tomasini and Van Wassenhove b. In the physical sense, humanitarian space represents a zone where civilians, noncombatants, and aid workers are protected from violence and attack and can move and operate freely.

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In the virtual sense, humanitarian space represents the interaction between the different members of the humanitarian system and how they create an environment in which their mandates can be executed Tomasini and Van Wassenhove b. The philanthropic stage refers to the most common type of relationship between business and nonprofit organizations, with a non-strategic level of engagement; it is mainly characterized by annual donations of money or goods made in response to requests from nonprofit organizations. An integrative partnership has specific characteristics Austin If an integrative partnership is formed between a humanitarian organization and two or more companies, it is called a multi-com- pany integrative partnership Thomas and Fritz TNT has been an active partner of the WFP since , when the two became involved in a five-year partnership program called Moving the World.

WFP had never established such a partnership with the private sector, and TPG had never engaged with a humanitarian organization. The partnership has been extended beyond the initial 5 years of engagement. In alone, TNT invested 8. To date , TNT has invested 40 million euros in the partnership in the form of hands-on support in emer- gencies, knowledge-transfer projects to help the WFP become more efficient and effective, and advocacy and fund-raising activities. TNT staff mainly help in developing and implementing WFP programs and initiatives in four particular supply chain management related areas: Footnote 5 continued these activities mainly encompass such areas as cause-related marketing programs, event spon- sorship, and special projects.

DHL and the UN Office for the Coordination of Humanitarian Affairs OCHA established a strategic partnership in extended for another 3 years in December until the end of , in the field of disaster response and preparedness. DRTs are responsible for free handling of relief goods that arrive on charter flights at the airport closest to a disaster-affected area. Professional preparation of DRT volunteers is key to successful deployment. The training takes the volunteers through the basics of disaster-relief operations, the role of the DRT, and team building to adequately prepare them for deployment.

Par- ticipants learn how a DRT is put together in the wake of a disaster and how airport logistics management works in cooperation with the UN. A memorandum of understanding sets out the types of pro bono services, such as warehousing and logistics, which a DRT could offer to governments dealing with a natural disaster. Approaching Business Models from an Economic Perspective. Download full text from publisher To our knowledge, this item is not available for download. To find whether it is available, there are three options: Check below whether another version of this item is available online.

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